For clarity, this is a purely speculative article – but the smoke signals seem to be there.
When the Lloyds Avios Rewards credit cards were launched, I was initially sceptical – apart from the hugely generous offer of no FX fees on foreign spending. Over time I came to appreciate the package, especially the way that the upgrade voucher benefits solo travellers who get no value from the BA Amex 241 voucher.
Feedback about Lloyds customer service was shocking. It has not improved in the last four years. My own experiences were just as bad – after I paid my wife’s bill from my bank account (a not uncommon thing, you might think) her cards were frozen for ‘suspected money laundering’. They would only be unlocked when I went to a Lloyds branch and showed them a statement from my HSBC account showing the money going out – but my next HSBC statement wasn’t due for 3 weeks and they would not accept a print from an in-branch machine.
What prompted this article is that Avios has just withdrawn the refer-a-friend bonus it was offering for the Lloyds Avios Rewards cards.
This scheme has run for the last three years. For Avios and Lloyds it was a very cheap way of recruiting new customers – and because Lloyds does not allow ‘churning’, they were likely to be long term customers too.
Why would Avios and Lloyds do this? Potentially because the cards are about to be scrapped.
Here are some more reasons why the cards may be on the way out:
Over the last few months we have seen Lloyds scrap the £140 Premier Avios card. TSB has also scrapped its two Avios cards having dropped the ‘refer a friend’ scheme a few months earlier. To be fair, these products were all stinkers.
I understand that American Express is cancelling all of its licensing agreements. Lloyds, MBNA and Barclays will have to stop offering Amex cards in the medium term. This means that the Lloyds Avios Rewards card would become a pure Mastercard package.
At 0.25 Avios per £1 on the Mastercard, with no companion Amex, Lloyds is going to struggle to get many people to pay £24 per year for the card
The core selling point of the Lloyds card – no FX fees and earn Avios on foreign spending – is not sustainable. In a world of 0.3% interchange fees there are only three ways to make money with a credit card. One is the annual fee (not sustainable as a pure Mastercard paying 0.25 Avios per £1), the second is interest charges (which are minimal on loyalty cards with a high income professional card base) and the third is the 3% fee on foreign spending (which Lloyds has voluntarily given up).
We know that American Express has agreed a wide-ranging credit card deal across IAG. I understand this includes options for Ireland and a Vueling card for Spain. The Lloyds card gets in the way of this.
We know from the recent Investor Presentation that all of the Avios schemes are to be merged onto the avios.com platform. Aer Lingus AerClub shows how this works – your AerClub number is also an avios.com number, and when you want to redeem you have to visit avios.com. When the distinction between avios.com and BAEC disappears, there is no need for both Lloyds and Amex credit cards.
Whilst probably not part of the original reasons why Avios may want to drop Lloyds, the fact that Lloyds will now also be issuing the Virgin, American, United, Lufthansa, Emirates and Etihad cards will not go down well.
As I said at the top of the page, this is pure speculation on my part. If we’re honest, though, it is difficult to see how these cards could continue to exist in their current form.
Want to earn more points from credit cards? – September 2022 update
If you are looking to apply for a new credit card, here are our top recommendations based on the current sign-up bonuses.
In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.
You qualify for the bonus on these cards even if you have a British Airways American Express card:
You can see our full directory of all UK cards which earn airline or hotel points here. Here are the best of the other deals currently available.
EDIT: Until 25th October 2022, there is an exceptionally generous sign-up bonus on The Platinum Card. You will receive 60,000 Membership Rewards points – double the usual amount – and £200 to spend at Amex Travel. You need to spend £6,000 within six months to earn the bonus.
British Airways American Express Premium Plus
25,000 Avios and the UK’s most valuable card perk – the 2-4-1 voucher Read our full review
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review
The Platinum Card from American Express
60,000 points, £200 travel credit and an unbeatable set of travel benefits – for a fee Read our full review
Virgin Atlantic Reward+ Mastercard
15,000 points bonus and 1.5 points for every £1 you spend Read our full review
Earning miles and points from small business cards
If you are a sole trader or run a small company, you may also want to check out these offers:
American Express Business Platinum
40,000 points sign-up bonus and a long list of travel benefits Read our full review
American Express Business Gold
20,000 points sign-up bonus and free for a year Read our full review
British Airways Accelerating Business American Express
30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review
Capital On Tap Business Rewards Visa
50,000 points bonus until 2nd October – the most generous Avios Visa for a limited company Read our full review
For a non-American Express option, we also recommend the Barclaycard Select Cashback card for sole traders and small businesses. It is FREE and you receive 1% cashback on your spending.